Commentary April 06, 2022 at 07:44 AM Share & Print
What You Need to Know
- The House Ways and Means Committee shares jurisdiction over H.R. 7310.
- House Education and Labor Committee members approved the bill by a voice vote.
- A House Republican says the spousal notification needs further review.
Members of the House Education and Labor Committee voted Tuesday to approve a bill, H.R. 7310, that could affect married people who want to take cash out of their 401(k) accounts.
The bill could also create a federal consumer savings program that would be managed by the Department of the Treasury, and it calls for the Department of Labor to improve defined contribution retirement plan fee disclosure rules.
Rep. Lucy McBath, D-Ga., introduced H.R. 7310 — the Protecting America’s Retirement Security Act bill — with help from 11 Democratic co-sponsors. The bill has no Republican co-sponsors.
The House Education and Labor Committee shares jurisdiction over the bill with the House Ways and Means Committee.
At deadline, Ways and Means had not scheduled a hearing or markup meeting for the bill.
H.R. 7310 Details
One section of the McBath bill would set new notification rules when a married person tries to take large sums of cash out of a 401(k) account or other individual account governed by the Employee Retirement Income Security Act of 1974.
A married participant would have to get consent from their spouse before withdrawing large sums of cash.
A participant would not have to get spousal consent to begin taking distributions in the form of a qualified joint and survivor annuity, or to roll account assets into another retirement savings arrangement that comes with similar spouse notification rules.
McBath said at a hearing in March that she was introducing the bill because of reports that some spouses try to hurt other spouses by emptying out their 401(k) plan accounts.
Another H.R. 7310 section would require the secretary of labor to review defined contribution retirement plan fee disclosure rules and “explore how the content and design of the covered disclosures may be improved to enhance participants’ understanding of fees and expenses as well as the cumulative effect of fees and expenses on retirement savings over time.”
“As part of such review, the secretary shall conduct outreach to stakeholders, including those representing plan sponsors and retirement plan participants,” according to the bill text.
A third section would let the IRS send one-fifth of of a taxpayer’s refund to a new rainy day savings program that would be administered by the treasury secretary.
If a taxpayer opted into the program, Treasury would invest in the cash in Treasury securities believed to be suitable for use in a rainy day fund.
All Republicans who participated in the hearing opposed the bill.
Rep. Rick Allen, R-Ga., noted that some in the Senate have asked for further review of the spousal notification bill, to ensure that it would not have unexpected and unintended consequences.
Rep. Lucy McBath, D-Ga. (Photo: House Education and Labor Committee)